This report uses data from the 1993 SIPP panel to examine poverty from October 1992 through December 1995. SIPP allows us to examine both the static and dynamic aspects of poverty, thereby providing a richer picture than the one drawn by the Current Population Survey (CPS), the survey currently used for official poverty rates. The CPS provides only a single static snapshot of poverty for the population. SIPP’s longitudinal data provide not only several static pictures but also several dynamic measures of movement into and out of poverty and poverty spells or duration. In addition, SIPP can also distinguish between short-term and long-term poverty. Unlike the CPS’ annual data, the SIPP uses monthly data to measure poverty; hence, the SIPP allows one to measure poverty on a monthly basis as well as for longer periods of time.
The picture of poverty drawn by statistics depends partly on the type of statistics used. In this report we describe poverty using seven different measures:
- Average monthly poverty rate: Measures poverty for each person in each month of a calendar year, computes a total, and averages it for the year.
- Episodic poverty rate: Percent poor for two consecutive months or more in a given year or panel.
- Chronically poor: Percent poor for all of 1993 and 1994- a 2-year period.
- Annual rate: Percent poor in a given year based on total income for the year and poverty thresholds that reflect changes in household composition during the year.
- Poverty spells: Number of months in poverty for those who are not poor the first interview month, but become poor at some point in the panel.
- Entry rate: Percent of people who were not poor during 1993 but were poor in 1994 using the annual rate given above.
- Exit rate: Percent of people who were poor during 1993 but were not poor in 1994 using the annual rate given above.